Sexism claims put Uber in crisis
Ride-hailing company buffeted by claims of sexism and discrimination that made it a ‘toxic’ place for women to work
Can Uber remake its culture and still keep its momentum?
Uber’s “baller” culture may have reached the end of the road.
CEO Travis Kalanick’s controversial history of flouting regulations and aggressively fighting the competition has in a mere eight years pushed the company to a $70 billion valuation, about $15 billion more than General Motors.
Now he is facing what may be his biggest crisis yet: Accusations of sexism that compound years of indications that an unchecked, hyper-alpha culture made Uber an uncomfortable place for many women to work.
On the heels of the #DeleteUber customer backlash for its initial cooperation with the Trump administration and response to the immigration ban, the startup that aims to remake transportation is taking fire from investors and the public over explosive allegations of sexist and discriminatory behavior. Among the charges leveled in a detailed February 19 blog post by former engineer Susan Fowler: That Uber’s human resources department refused to discipline Fowler’s manager after he made sexual advances, even though he had harassed other women, and that Fowler was told to expect a poor performance review if she stayed on the team. The question facing Kalanick, 40, is whether he can remake his company’s maverick culture without losing the surging momentum crucial for ongoing expansion and an eventual initial public offering. “Uber’s response to this particular crisis will be defining for the company,” Uber investors Mitch and Freada Kapor wrote in an
“This industry required a certain personality to change it, someone willing to stand up to regulators and change laws or make new ones. So, the thing that made him and the company successful is now causing havoc.”
Brad Stone, author of The Upstarts, which chronicles category-altering companies such as Uber and Airbnb
open letter to Kalanick last week, which hammered the company for its “destructive” and “toxic” atmosphere.
If any organization’s tone is set at the top, Uber’s cued off a boss whose judgement often erred on the side of being boorish.
There is the genesis story that says Uber wasn’t about solving transportation issues but getting Kalanick and his fellow “ballers” (slang for pro athletes living large) town-car rides with a screen tap.
Or the time the company deflected responsibility when an Uber driver hit and killed a 6year-old girl between fares. And the now famous Kalanick joke the company’s nickname was “Boober” for the female attention it generated.
Several former Uber employees who spoke with USA TODAY under condition of anonymity described a bellicose, almost frathouse environment where milestones were often celebrated with chest bumps and men held pushup contests nightly at their desks.
While such a setting might alienate women, it is not criminal. But that atmosphere ultimately generated a culture that indeed sometimes went too far.
A notorious Uber party held in Las Vegas in 2015, where Beyonce performed for a rumored $6 million fee, featured a variety of outrageous incidents, according to two former employees who asked that USA TODAY not use their names for fear of retribution.
They include a general manager groping a fellow employee and another staffer who brought a prostitute to his hotel room then called police when she stole from him. Both were fired, according to the former employees. Company representatives declined to comment.
Opinions differ on the impact of such incidents.
“The company is a machine,” says Neal Dempsey, managing partner at venture capital firm Bay Partners. “It will take a series of this illegal behavior to hurt it.”
But Roger McNamee, founding partner at venture capital firm Elevation Partners, questions Uber’s huge capital raises — $15 billion despite lingering uncertainly about per-ride profitability — and its limited financial disclosures.
“Now the company’s horrific culture has been exposed in terms that may cause an acceleration in the #DeleteUber campaign,” he says.
By many accounts, the Fowler affair could well be a turning point for a company that had in the past been accused of reacting brusquely, if at all, to criticism.
At a staff meeting Tuesday, a visibly upset Kalanick acknowledged breakdowns in the company’s system and owned up to his mistakes in overlooking in-house issues.
Then on Thursday, Kalanick met with more than 100 female engineers for an hour during which they urged him to begin “listening to your own people,” according to BuzzFeed News.
Uber has launched an internal investigation led by former U.S. attorney general Eric Holder, who Uber hired back in June to help with other regulatory issues.
The Kapors are skeptical that change will come from a probe headed by “a team of insiders” with a vested interest in not upsetting the private juggernaut’s eventual road to a lucrative initial public offering.
Holder and his law firm partner Tammy Albarran responded to the Kapors’ online letter with a statement saying they intended to be “thorough, impartial and objective.”
Traditionally, Kalanick has tackled obstacles with the same approach: ignore and proceed.
When he started Uber with a few friends in 2009, the idea was to create an app that would give town-car drivers extra fares during their down time. It was less about starting a world-changing business and more about helping his friends get cool upscale rides.
But as the concept caught on, Kalanick had to face off against irate taxi commissions and politicians, groups that had managed to derail past tech startups hoping to get in the transportation game.
“This industry required a certain personality to change it, someone willing to stand up to regulators and change laws or make new ones,” says Brad Stone, author of The Upstarts, which chronicles category-altering companies such as Uber and Airbnb. “So, the thing that made him and the company successful is now causing havoc.”
That “thing ” would be a takeno-prisoners approach to business that pervaded the culture inside the startup, attracting a sharp-elbowed lot: Goldman Sachs bankers, Amazon engineers, Google policy veterans. And it worked. In a mere five years, Uber would raise $1.2 billion.
The havoc along the way would be a range of withering incidents that followed as Uber grew exponentially from Bay Area sensation to global force.
That includes a damning incident in the fall of 2014. After Sarah Lacy of Silicon Valley website Pando Daily blasted the company for a sexist campaign in France, top Uber exec Emil Michael grumbled that Uber should hire opposition researchers to dig up dirt on reporters it did not like. Michael apologized but was not fired.
What makes the most recent explosion all the more significant is that relatively speaking, Kalanick had managed to stay free of foot-in-mouth disease for the past 14 months.
On the occasions that USA TODAY sat down with Kalanick to discuss such company news, the CEO refreained from lobbing the grenades that made him infamous.
But “we are dangerously close to a turning point” for the company behind the popular app, says author Stone.
While consumers love Uber’s product, they are connected by social media and can turn easily, as evidenced by #DeleteUber. What’s more, Uber’s main U.S. rival Lyft recently added 54 more cities to its roster and its CEO John Zimmer has vowed to dominate the U.S. market.
And while Uber sits on pile of money to pursue its global ambitions, an inevitable cash-returning IPO looms and investors could be turned off by a curdled corporate culture that repels top talent.
“The Uber brand has taken a hit with worrying frequency over the last couple of weeks,” Stone says. “They need to make sure they can straighten things out.”